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Macro Effects Tax Changes (Romer and Romer)

The macroeconomic effects of tax changes: estimates based on a new measure of fiscal shocks“, by Cristina Romer and David Romer (University of California, Berkeley) , investigates the impact of tax changes on economic activity. They conclude: “The behavior of output following these more exogenous changes indicates that tax increases are highly contractionary. The effects are strongly significant, highly robust, and much larger than those obtained using broader measures of tax changes”. (PDF en English) .

See: http://elsa.berkeley.edu/~cromer/RomerDraft307.pdf

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